Crossing the Era of Chinese Prosperity
American companies are one by one downsizing and reducing their activities in China.
IBM is the latest example of these companies, having announced that it will downsize and reposition its research and development teams in China.
Previously, Microsoft officially informed its employees to prepare for changes in their job positions in China. The continuous news from publications and economic research institutions about the change in the operational trends of Western, especially American, companies in China is nothing new.
The official announcements and decisions of China’s ruling party, amid heightened tensions with the US, introduced serious policies of self-sufficiency and maximum independence from technological influence and dominance, which were naturally more than anything internal propaganda.
Nevertheless, the extensive security crackdowns on major Western companies, sometimes accompanied by security forces raiding financial and commercial institution offices, have made conditions tougher than before.
The competition between China and the US has led to new sanctions and restrictions by the Biden administration against China. Specifically, Biden’s foreign policy team is very strict regarding Chinese technological aid to Russia’s invasion of Ukraine and has recently added more Chinese companies to its blacklist in this regard. The Chinese are seriously angered by this trend, yet they always need America’s help in various fields.
The Chinese must reduce this constant need, and in the meantime, the tense atmosphere of relations between the two countries has made things harder for large companies.
In 2023, IBM recorded a 20% decrease in revenue in China, which cannot be overlooked.
The market in China for electric vehicles produced by American and European companies has also become more challenging than before. The golden era in China for major Western companies is coming to an end.
China needs America, and Chinese companies find it hard to part with the vast Chinese market. Navigating these conditions requires a special skill.